Anders Hove on China’s Energy Security

The analyst discusses the impact of the Ukraine war on China’s energy supply, how China has taken the lead in renewable energy, and the potential effects of Trump’s re-election.

By Paddy Stephens — March 2, 2025

Anders Hove is a Senior Research Fellow at the Oxford Institute for Energy Studies, focusing on the China Energy Research Programme. He previously served as a non-resident fellow at the Columbia University Center on Global Energy Policy and has spent 12 years in Beijing, most recently as Project Director for the Sino-German Energy Transition project at GIZ, a German federal enterprise involved in international development cooperation. In this lightly edited Q&A, we explore the implications of the Ukraine war on China’s energy security, the evolving role of coal in China’s energy mix, and how China emerged as a leader in renewable energy.

The Impact of the Ukraine War on Energy Security

Q: Since Russia’s invasion of Ukraine, China has increased its imports of Russian gas and oil. How has that affected its energy security?

A: It’s crucial to recognize that oil and gas comprise a relatively small share of China’s overall energy consumption. In China, oil is primarily utilized by the industrial sector rather than for transportation, which diminishes the impact of fluctuations in oil prices on individuals’ daily lives. Gas plays an even smaller role; it accounts for only 3 percent of the country’s electric power generation. If gas were to be eliminated entirely, it could be replaced with existing coal-fired resources. Moreover, gas is often viewed as a luxury due to its cost.

China operates as a regional market, which may surprise many. Over the past two decades, the liquefied natural gas (LNG) market has evolved into a global one. However, once LNG arrives in China, the national pipeline infrastructure limits its distribution, leading to localized consumption. This is also true for pipeline gas, where the gas is often used in the province where it arrives, rather than being transported across the country.

Despite these dynamics, any shifts in the composition of China’s energy imports can significantly impact specific industries. For instance, a rise in China’s dependence on Russian gas could affect global LNG markets, while the inverse is also true. It’s a paradox: China’s demand for certain resources can grow substantially, making it a major source of global demand, yet the share of these resources in its domestic market remains minor.

Q: Did Russia’s invasion of Ukraine lead to a heightened focus on energy security in China?

A: Energy security became a top priority for the central government in 2019, long before the Ukraine conflict and prior to President Xi Jinping’s announcement of China’s dual carbon goals in 2020—namely, peak CO2 emissions by 2030 and carbon neutrality by 2060. The focus on energy security has intensified, particularly following the domestic power outages in 2021, which had no connection to international geopolitical issues. In China, energy security primarily emphasizes the reliability of the power sector. This concern has contributed to a surge in coal-fired power capacity, as provinces strive to avoid power supply disruptions.

The Role of Coal in China’s Energy Mix

Q: What role does coal play in China’s energy mix, and how is that changing?

A: Coal is often described as the “ballast stone” of the Chinese economy and energy system—it stabilizes the energy supply. While coal remains a significant part of China’s energy security, especially at the provincial level, its role is expected to evolve towards supporting and backing renewable energy sources.

Currently, many provinces prefer to utilize their underused in-province coal assets instead of importing power, even if outside sources could be cheaper. This has resulted in a substantial overcapacity of coal power. In 2023, for instance, China initiated the construction of 70 gigawatts of new coal-fired power stations, nearly four times more than the rest of the world combined.

Despite the rapid growth of renewables, there are concerns that the new coal plants could hinder China’s energy transition, making it more expensive. Additionally, there is a risk that, similar to past situations, power companies may have incentives to limit renewable energy output to maximize profits from coal plants.

The Future of Renewable Energy

Q: How much energy security can intermittent sources like wind and solar provide?

A: This is a complex question, and I cannot claim to have a definitive answer. In the late 1990s, many believed power systems could only handle 1-3 percent of wind and solar due to their intermittent nature. Yet, today, the UK relies on wind for 45 percent of its energy, and Germany exceeds that with wind and solar combined.

China operates on a larger geographic scale, and while it can learn from Germany’s approach to flexible coal power, it currently relies more on long-term power contracts that resemble older coal-based systems. The future energy sector is unlikely to depend solely on renewables; models suggest that flexible power sources and nuclear power will also play significant roles.

Resistance to Clean Energy Adoption

Q: Is there resistance to adopting clean energy in China?

A: Certain systemic factors hinder a shift towards low-carbon solutions. Companies are often incentivized to reinvest profits into their existing businesses rather than exploring new ventures that could threaten their profitability. For instance, traditional automakers may hesitate to invest in electric vehicles (EVs) that might undermine their current sales.

Additionally, large energy companies may be reluctant to invest in solar energy due to lower profit margins, favoring oil and gas investments instead. Even in the absence of shareholder pressures, energy companies may prefer to remain within their established areas of expertise.

However, there has been remarkable progress in the EV sector, as Chinese companies have rapidly adopted new technologies, exceeding government expectations. This shift is partly due to a clear signal from leadership that China should become a leader in car manufacturing, with EVs presenting an opportunity to surpass international competition.

China’s Position in Green Technology

Q: Is China’s lead in green technology unassailable?

A: The answer is both yes and no. While China currently leads in battery and EV manufacturing, it is not the top innovator in battery technology when considering patent citations in academic literature. However, China is likely to eventually dominate this field, much like it did in solar manufacturing, driven by high domestic demand that fosters competition and innovation.

Despite its current advantages, China’s lead is not completely secure. The relatively low barriers to entry in manufacturing-intensive clean energy technologies mean that other regions could catch up through strategic policies, provided they have a growing domestic market and partnerships with leading Chinese companies.

Implications of U.S. Tariffs on Renewable Energy

Q: What are the implications of the extra tariffs imposed by the Trump administration on Chinese renewable energy manufacturers?

A: The U.S. accounts for only 7 percent of the global solar market and has already implemented tariffs on various clean energy imports from China. For many Chinese companies, the U.S. market is a minor consideration.

The Trump administration’s proposed elimination of subsidies for EVs and reductions in R&D spending could significantly hinder U.S. innovation in renewable technologies. A decline in the domestic market for these technologies would negatively impact innovation, startups, and investor confidence in the sector.

Conclusion

China’s leaders recognize the economic benefits of green industrial policy. In contrast, Western leaders may perceive political risks associated with such policies, which could impede the transition to clean energy. While some analysts see Trump’s re-election as an opportunity for China to further extend its lead in green technologies, it is essential to consider how global dynamics will shape the future of energy security and technological innovation.